July 21, 2014

Shale gas now accounts for half of all U.S. production, according to EIA statistics—a milestone that many studies expected wouldn’t be reached until the mid-2020s or later. “Assuming that technology will allow ever more shale gas production at low prices—and betting energy policy and the future energy security of the country on it—is risky business,” says geologist David Hughes, who retired from the Canadian Geological Survey and is now doing assessments of shale gas and oil for the nonprofit Post Carbon Institute, a California-based environmental think tank.

The EPA’s proposal for cutting power plants’ greenhouse gas emissions through 2030 is based partly on the expectation that natural gas will play a crucial role, especially during the next five to 10 years. The agency laid out various scenarios under which states might meet targets for cutting their emissions. Overall, all the scenarios foresee an increased reliance on natural gas; the EPA calls for switching over coal-fired power plants to burn natural gas and for more use of existing natural gas plants that are idle.

With the increased reliance on natural gas, the agency’s lower-emission scenarios foresee U.S. natural gas production continuing to rise, increasing nearly 15 percent by 2020. Meanwhile, natural gas prices would rise only about 50 cents over what they otherwise would be, to about $5.50 rather than $5 per thousand cubic feet.

Further, there are hopes for relatively low-cost natural gas to revive U.S. industries—from steel to plastics—that could take advantage of current prices, which by world standards are cheap.

At the same time, there is a hope that the U.S. will be able to export large amounts of natural gas. The EIA expects the nation to be a net importer for a few more years but then for net exports to soar through the 2020s, reaching about 10 percent of the nation’s production. “Certainly a couple of years back, before the Marcellus Shale added so much low-cost resource…we would have worried about the upward price pressure associated with adding that amount of new market in the gas space,” says Jen Snyder, a gas analyst with the research and consulting firm Wood Mackenzie. Now, Snyder says, Wood Mackenzie’s outlook is that “the resource base can handle the added demand, even with proposed LNG [liquid natural gas] export facilities, even with planned gas-intensive industrial projects.”

One of the major risks of dependence on shale gas is that wells’ production drops off so sharply, Hughes says. Shale gas wells’ production rates typically drop by at least half in the first year and continue to decline thereafter. The EIA expects that nearly half of all the “technically recoverable resources” of shale gas identified so far would be consumed by 2030. And at that point, shale gas production would still be increasing, with much more extracted after 2030. John Staub, leader of the EIA’s Oil and Gas Exploration and Production Analysis team, says the agency’s model “includes technology change,” which, year after year, increases the amount of gas that can be extracted.

“The EIA apparently has unfettered faith in new technology developments to provide shale gas production to meet its projections,” Hughes notes. He points out, however, that the EIA’s most recent assessments of the total amount of gas that can be recovered from major shale gas areas, formations such as Marcellus and Texas’s Barnett , have fallen rather than risen. Also, according to Hughes’s analyses, new wells in Barnett are less productive, a sign of stagnation as “sweet spots become saturated with wells and drilling moves into lower quality rock,” he says. “This is unequivocal evidence that geology in shale gas plays ultimately trumps technology.”

The U.S. is a mature exploration and development province for oil and gas. New technologies of large scale, multistage, hydraulic fracturing of horizontal wells have allowed previously inaccessible shale gas and tight oil to reverse the long-standing decline of U.S. oil and gas production. This production growth is important and has provided some breathing room. Nevertheless, the projections by pundits and some government agencies that these technologies can provide endless growth heralding a new era of “energy independence,” in which the U.S. will become a substantial net exporter of energy, are entirely unwarranted based on the fundamentals. At the end of the day, fossil fuels are finite and these exuberant forecasts will prove to be extremely difficult or impossible to achieve.

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24 Responses to “Fracking: How Long Can the Boom Last?”

The reserve and projected recovery data tend to be self reported by the gas industry, not exactly a reliable source. I have heard alternative estimates that place the recoverable reserves lower than government projections, but don’t recall where I read them. It might be interesting if you could dig those studies up.

Peter- thanks for the link. Read the exec summary. I try to explain what it says. It’s about production rates not just reserves. It’s useless if it can’t be extracted fast enough. Why doesn’t anyone get that oil is expensive because Saudi Arabia can’t increase production rates anymore, like they used to every time we had a recession. They are tapped out. That’s another thing the eagle eyed have spotted. The IEA projections admitted peak oil by fantasizing that gas and unconventional would replace declining conventional oil. It passed right by without a wimper. Meanwhile the US is fracking for gas and drilling for oil like crazy. Some perspective from this appear shows that we are nowhere near our 1970 peak, or even the Alaska pipeline shoulder. That’s how imaginary this recent drill baby drill quest is.

There are signs that shale oil in the current plays will peak before 2020. However, there are still more plays to tap into. Look up ‘Cline Shale’, and Mexico is believed to have more total shale oil than Texas.

Unconventional oil production is the only thing holding back world peak oil right now. I’m reasonably sure we’ll hit a point where the flow rates from conventional plus unconventional start to decline in 10-20 years, signaling a true world peak, but it’s a matter of how much truly extractable shale oil is out there, and how fast it can be extracted.

“Some perspective from this appear shows that we are nowhere near our 1970 peak, or even the Alaska pipeline shoulder.”

We’re rapidly approaching both the Alaska shoulder and our 1970 peak. I think there’s a decent shot we’ll reach them. It then becomes a matter of how long we can stay there. Once shale oil itself peaks, we’ll likely plummet as fast as shale oil has allowed production to rise.

Endless growth? Technology over geology? How about a distorted world view slavish to growth and mindless to the effects of consumption. Gas is just the latest in a series of consume now pay later schemes attempting to keep the party going past midnight.

The carpel tunnel is getting me again, so i won’t type much, but on greenman’s link above there is a chart near the end showing 50% of fossil energy ever produced has been produced from 1986 to now. Wait till that hits 2000….

Good post. To add to the discussion, one of my sources points out that in 2013-2014 the US collected its highest inventory of natural gas in history. By April 1 of this year, that inventory went down to practically nothing. The US consumed its largest inventory of natural gas in history! The reason was a combination of the protracted cold snap in the eastern US, and an unusually high consumption of propane by agricultural interests, (for drying out crops at harvest). I agree with Mike Roddy; the industry reporting is very suspect. Even projections by EIA seem incredibly unreliable. For this reason, there are some who even think that the IPCC projections of increased fossil fuel burn are inaccurate and too high. Former CIBC Chief Economist, Jeff Rubin often quips that in the next 20 years, “Archie Bunker and Al Gore will be holding hands”. Interesting times, for sure.

I really have no idea how long the “fracking boom” can last. Probably long enough to put a great deal of methane into the atmosphere through leaks, while creating illusion that CO2 emissions are falling (because the natural gas burning displaces coal, for awhile).

But I have to question the wisdom (yet again) of the big push towards “green alternatives” like solar and wind when the chief backup system is supposed to be gas turbines, which of course will be powered by natural gas. This seems like a surefire way to ensure even more fracking will take place.

But yeah, I know you guys say we don’t need dedicated backup. We just plug a wire into the electric car’s cigarette lighter and run our homes and factories off of that. And we’ll still have plenty of juice left in the batteries to actually drive the car. Problem solved.

You do realize some of the biggest electric car markets are ones with high penetration of nuclear power right? Sweden, France, and China are all very big markets for EVs. I’m sure the nuclear industry is thrilled with the idea of finding a use for off peak electricity.

Meanwhile, the 470,000 tons of depleted uranium tailings from the last 70 years of enrichment, already mined, refined and sitting in US warehouses, could run the nation for 400 years without pulling up a single shovel-full of ore.

Meanwhile the 10^30 ton of hydrogen already perfectly fusing and providing reliably on average 1000 W/m2 for every m2 on earth for the next few billion years and could run all humanity several times over without us messing around with stuff we can’t handle.

Natural gas, unfortunately, is a risky and dangerous distraction to alternative energy development. The emissions, though lower than coal are still cumulative, the fracking itself is hazardous for various reasons, not the least of which is seeping gas from hundreds and hundreds of wells, and the energy source depletes rapidly leaving sunk investors high and dry at the most unexpected times. Add to these facts the reality that we need rapid elimination of carbon emission to prevent catastrophic climate change and you realize that nat gas is a rather bad choice. We’re sinking ourselves into at least another 20-40 years of fossil fuel burning by making this choice. Monumentally bad idea.

“Are natural gas and renewables friends, enemies, or frenemies?” asked National Renewable Energy Laboratory Joint Institute for Strategic Energy Analysis Director Doug Arent. The risks of a theoretical natural gas project and a theoretical renewable project, Arent explained in answer to his own question, address one another’s “variability and points of failure and become points of complementarity and mutual support.”